CFPB issues 1071 proposed rule

The Consumer Financial Protection Bureau issued a proposed rule to implement Dodd-Frank Section 1071, which requires the bureau to implement data collection and reporting requirements for small-business lending.

Background: Section 1071 requires financial institutions to collect and report certain data on credit applications from women-owned, minority-owned, and small businesses, including the race, sex, and ethnicity of the principal owners.

Narrow Exemption: In a national news release, ICBA said that it strongly supports a robust community bank exemption, but the proposal’s exemption for those that originate fewer than 25 loans per year is far too narrow.

Outline: In fact, the CFPB last year issued a nonbinding outline of proposals for implementing the rulemaking that considered an exemption for community banks with $200 million or less in assets or up to 100 loan originations.

Scope: Going beyond its statutory mandate, the bureau also proposed requiring several data points that were not called for by Congress, including loan pricing, guarantees, and other detailed attributes about small-business loan applicants.

More: In its release, ICBA said the requirements will harm small-business lending amid the ongoing COVID-19 pandemic, and it urged the bureau to reconsider the proposal’s impact before proceeding with a final rule.